State sets record with tax breaks

Sunday

Jan 29, 2012 at 12:01 AMJan 29, 2012 at 1:00 AM

JEFFERSON CITY (AP) — Missouri economic development officials authorized a record amount of job-creation tax breaks for businesses in 2011, ratcheting up state incentives even as new figures show that past business enticements are falling short of their anticipated jobs.

The Missouri Quality Jobs program offered nearly $80 million in tax breaks to 57 projects last year, according to figures obtained under an open-records request by The Associated Press. Both figures are records for the state’s main job-incentive program, which began in 2005.

Gov. Jay Nixon’s administration says the figures are evidence that Missouri’s economy is “turning the corner” from a recession that pushed the state’s unemployment rate to more than 9 percent for nearly two years. The state’s estimated unemployment rate fell to 8 percent in December, even though Missouri had the second-largest job loss in the nation that month.

“With prospects improving, more companies are considering expansion and the creation of new jobs, and it is fortunate that the state has a program like Quality Jobs to assist in their growth,” said John Fougere, a spokesman at the Missouri Department of Economic Development.

Businesses approved for the Quality Jobs program in 2011 told the state that they anticipate creating 6,451 jobs in the coming years. The Quality Jobs program requires companies to create a minimum number of jobs — ranging from 10 to 100, depending on the type of business — within two or three years of being approved for the program.

Once they hit that job threshold and meet wage and health-insurance requirements, businesses then have three to five years to claim their tax breaks, which are awarded on a per-job basis.

Figures from the Department of Economic Development show that many companies have yet to make good on their past promises to hire scores of employees.

For the 167 projects authorized from 2005 through 2010, businesses have reported creating just 38 percent of the jobs they had anticipated when applying for the program. They have been issued less than $83 million of the $315 million of tax credits they were originally authorized to receive.

Those figures are likely to increase in future years, because many businesses still have time left before their program deadlines. But it appears unlikely that the actual jobs will come anywhere close to meeting the original projections. Businesses approved for tax breaks in the first four years of the Quality Jobs program have reported hiring only a little over half of the 12,529 employees they had projected.

That kind of success rate has caused even some business groups to question whether the tax breaks are effective.

“It does kind of make you wonder: How many jobs would be created if you took that $80 million and you applied that to a cut in the corporate or the individual income tax for businesses?” said Brad Jones, the state director for the National Federation of Independent Business.

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